On May 29, 2012, the Supreme Court of the United States denied certiorari in one of the most interesting, albeit troubling, construction-related cases to make national headlines since United States v. Spearin, 248 U.S. 132 (1918). The suit, Jacobs Engineering Group, Inc. v. State of Minnesota, --- S.Ct. ----, 2012 WL 668282, has its origins in the bizarre tragedy of the 2007 Interstate 35 bridge collapse over the Mississippi River in Minneapolis that killed 13 people and injured 145.

Following the tragic events of 2007, the Minnesota legislature created a fund for victims and survivors of the incident. The legislature craftily included within the compensation statute the following provision:

Notwithstanding any statutory or common law to the contrary,
the state is entitled to recover from any third party, including an
agent, contractor, or vendor retained by the state, any payments
made from the emergency relief fund or under section 3.7393 to
the extent the third party caused or contributed to the catastrophe.

Minn. Stat. § 3.7394(5)(a) (emphasis supplied). This one sentence breathed life into liabilities that had been dead for 26 years under Minnesota’s statute of repose.

The bridge was designed by a predecessor of Jacobs in the 1960s and construction of the bridge was substantially completed in 1967. In 1982, 15 years later, Jacobs’ liabilities expired according to Minnesota’s statute of repose. Fast forward another 26 years, and Jacobs found itself in court.

The web of claims goes something like this: in 2008 and 2009, more than 100 victims filed personal injury and wrongful death cases against URS Corporation and Progressive Contractors, Inc. URS was an engineering company that was conducting a fatigue and fracture study of the bridge at the time of the collapse, and PCI was a construction company that performed maintenance on the bridge prior to the collapse. URS and PCI brought third-party claims against Jacobs, and PCI filed a third-party action against the State of Minnesota, which also brought claims against Jacobs to recover funds for payments made by the State to survivor-claimants.

Jacobs moved to dismiss, arguing that the State’s claims were barred by the statute of repose and that the “Johnny-come-lately” statute did not revive them. Such revival, Jacobs argued, would violate the Due Process Clauses of the United States and Minnesota Constitutions. Jacobs lost that argument, three times. After appealing the trial court’s decision to a Minnesota court of appeals and to the Minnesota Supreme Court, Jacobs had one last option -- an appeal to the Supreme Court of the United States. On May 29, 2012, the Supreme Court dashed Jacobs’ hopes when it declined to review the case. So the Minnesota decision stands, and Jacobs must face the music.

Could this same result happen in Florida? No. In 1996, the Florida Supreme Court held that a portion of a legislative act that abolished the statute of repose for claims that were already barred violated the Due Process Clause of the Florida Constitution. Agency for Health Care Admin. v. Assoc. Industries of Fla., Inc., 678 So.2d 1239, 1254 (Fla. 1996). That case involved the 1994 amendments to the Medicaid Third-Party Liability Act, Fla. Stat. § 409.910. The Act itself provided the State with a cause of action to recover health care expenditures made on behalf of Floridians and caused by the tortious conduct of others. The amendments included various changes intended to strengthen the State’s ability to recover under the Act. One provision expressly eliminated the statute of repose as a defense to any action brought under the Act. Fla. Stat. § 409.910(12)(h) (1995). The Florida Supreme Court struck this language and held that the legislature cannot revive time-barred claims. Agency for Health Care Admin., 678 So.2d at 1254. The Court explained: “Once barred, the legislature cannot subsequently declare that ‘we change our mind on this type of claim’ and then resurrect it. Once an action is barred, a property right to be free from a claim has accrued.” Id. (citing Wiley, 641 So.2d 66, 68 (Fla. 1994)).

Like Minnesota, however, certain other states hold that the retroactive revival of liabilities may pass constitutional muster. Therefore, a Florida choice-of-law provision may be the best protection for your clients and their successors against remote future liability. They’ll thank you in 50 years.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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